Will Ohio Legalize a Marijuana Monopoly?

As we continue to watch the emergence of new legal marijuana markets across the United States, it’s instructive to look at another so-called vice: gambling. Where games of chance were once relegated to Nevada and Atlantic City, NJ, it’s now hard to find any state that doesn’t have some form of gambling, be it riverboat casinos, tribal casinos, or just a state lottery.

One place gambling took hold recently is Ohio. In 2009, the state passed a constitutional amendment known as Issue 3 that legalized gaming, with a catch. The organizers of that initiative pushed to make legal “only one casino facility at a speciﬁcally designated location within each of the cities of Cincinnati, Cleveland, Columbus, and Toledo.”

The casino initiative was bankrolled mostly by Penn National Gaming, Inc., a company that runs twenty casinos nationwide including, unsurprisingly, the four constitutionally-mandated casinos in Ohio. For their investment of $32 million, Penn National now has a constitutional monopoly on casino gambling in America’s seventh-largest state. In the first two full years of operation (2013-2014), those four casinos had adjusted gross revenue (gamblers’ losses minus promotional costs) of $1.5 billion.

But like the casino amendment, wealthy backers would be writing in their properties as the 10 sites that would be approved statewide for marijuana cultivation for sale. Once those 10 growers are locked in, nobody else in the state could cultivate and sell cannabis legally. (Technically, that makes them a cartel, not a monopoly, but the difference would be negligible.)

The editorial board of the Cleveland Plain-Dealer isn’t sanguine about the proposed initiative’s chances. “If the marijuana amendment arrives as advertised, it would be anti-competitive in the extreme,” write the editors, adding, “creating an anti-competitive constitutional monopoly aimed at enriching a tiny number of landowners seems like the exact wrong way to go about any conceivable [marijuana] legalization.”

Meanwhile, the Ohio Rights Group, led by president John Pardee, continues in its fight to bring medical marijuana to the Buckeye State. Pardee’s group is underfunded and disorganized, failing to gather even a third of the signatures necessary to put its Ohio Cannabis Rights Act on the ballot in 2014. “I’m against creating a constitutional monopoly,” Pardee told the Plain-Dealer, but unfortunately it seems the investors in marijuana reform in Ohio want it that way.

CORRECTION: A previous version of this story misidentified Responsible Ohioans for Cannabis as the group behind the marijuana monopoly amendment. The people behind the monopoly have yet to be named, while Responsible Ohioans is proposing an amendment that “would let everyone grow their own [cannabis], up to 99 plants, and [would have] no limit for commercial production with a low cap on licensing fees, and sales taxes would be the only [taxes] permitted.” Learn more about that amendment at responsibleohioans.org.